Ashutosh Limaye, Head - Research & Real Estate Intelligence Service, JLL India
There is a lot of opacity in India’s real estate market. The industry is highly fragmented, and availability of data/ information in the public domain is limited. Moreover, the real estate industry is very locally orientated and in India, with every market behaving in its own unique way. In fact, there is more diversity in Indian real estate than in most other countries. Nevertheless, mapping the terrain and making sense of it is vital for investors and end users, corporate occupiers and developers, and this is where international property consultants (IPCs) like JLL come in.
It is important for all real estate stakeholders to be able to understand and adapt to local market dynamics, and at the same time remain attuned to global trends. All these factors highlight the importance of market research consultants in today’s market. Thanks to these consultants and their deployment of expert teams to collect and analyze information, the industry is now on its way to developing a robust database and is able to use advanced analytics to forecast numbers and trends, and thereby decipher market trends across different real estate asset classes.
The Evolution of Real Estate Market Research in India
Until 2005, the Indian real estate market was a very small one in which developers took calls based on their own judgments. This approach more or less worked well for them. However, post-2005, foreign direct investment (FDI) came in and the industry began growing. As international players came in with their global exposure and expertise, the market’s expectations changed a lot too. Now, taking a call purely out of judgment was fraught with risk, as its probability of working out correctly went down drastically.
As the industry grew, developers also started employing market research consultants and commissioning market studies to take more informed decisions, which was not the case earlier. Studies carried out in India by IPCs are at par with those done by their global counterparts. This is because IPCs, after entering India in the mid-90s, built up their data and market research capabilities from scratch over a period of time.
Market Research Consulting - Increasing Relevance
The importance of expert market research cannot be under-estimated. Private equity (PE) funds have always preferred to involve real estate consultants for a second opinion on their entry/ exit strategy, and continue to rely on their unbiased analyses and advice. In fact, foreign institutional investors and PE funds made the IPCs an important part of the industry, in India and elsewhere. These funds also made developers realise how IPCs have changed the ways of working of this industry to a large extent. Their role will only become more relevant in the future.
The Future of Real Estate Market Research
As the market evolves, the market research industry too will continue to change over the coming years. Today, IPCs have two roles - to manage data and address data needs of clients, and to provide expert advisory services. Going into the future, the role of data will reduce as industry becomes more transparent and technology gets more integrated with the industry. On the other hand, the advisory role will increase to an extent that it could very well play a dominating role in the Indian real estate industry.
This is the age of specialization - specialization increases the success ratio of what firms or individuals do today. Data analytics is another area that is becoming increasingly significant. While skeptics say that the advisory role will reduce going forward, such a scenario is highly unlikely. If we study what has happened in the developed world, it is evident that there has been a clear focus on specialization, and a concurrent increase in the role played by advisory services.
However, in India, there is no formal academic course for real estate. Therefore, it is important to sensitize people about what skills are needed in this industry and how it can be a good career option for them. As part of its corporate social responsibility (CSR) agenda, JLL employees regularly visit schools and colleges to enlighten students about career options in this industry and help orient interested ones in this direction